Welcome to the weekly article looking at the current music industry, its challenges and overall why and how SHOUT4's RevShare model works so well for the independent music industry. Written by SHOUT4 Chairman, Ric Yerbury.
Seems like we think about money quite a lot at the moment. Not really surprising given the challenges in the world currently. I was thinking, in particular, about the music industry which seems to be weighing up the problems including the fair distribution of streaming income to the lack of any revenue from live. So maybe it is time to consider whether we have the distribution of cash right and if not what we can do about it?
Let’s start with the equitable nature of deals we strike in the industry.
I am told that the current favoured deals are a reflection of risk and reward. Fair enough up to a point, but without the original talent, the labels and publishers have nothing. So it is a balance. We can park up the ownership of the copyright for the moment, as you know I believe they should be remaining with the artist. We must think longer about real income and the ability of artists to develop, thrive and pay bills.
Cash buys bread and a bed to sleep in, streaming numbers don’t immediately and when payments are made, possibly won’t cover it.
We all agree that we should look to get the distribution of cash from the consumer to the talent as direct as possible and without too much recoupment, so even a moderate streaming result realises some real cash.
I am mindful of the ongoing debate on why labels are taking so much from the artist and platforms when their ‘risk’ of manufacture, storage, distribution and sales of ‘old school’ physical product has been minimised thanks to the adoption of digital formats and their distribution pipes; and also of the equitable remuneration argument which Tom Gray, Crispin Hunt and many others have said so much about this matter, so convincingly.
But let’s for a second return to the creation and marketing of the music.
We have to make the record in the first place and then bring in a digital wizkid agency to market the product. This needs cash, or at least some cash, if you are able to bring SHOUT4 deals to the table whereby all parties can share in any upside in return for reducing upfront costs.
So where does the money come from? There have been a number of interesting offerings over the past few years as to how to fund this gap. We start, of course, with the labels and publishers advancing costs in return for taking a share in the assignment of the copyrights created. It works, but does leave the artist wondering how expensive this money has proved to be when their record is in the Billboard Charts and on returning from a world wide tour (yes I know but live will be back!), they still have no cash to pay rent. The advance often sadly seems to still be at a non recouped level, even following critical and commercial success. And so it goes on, twas ever thus since the 1960s.
To get cash flowing better, reduce upfront costs by sharing in the future revenue streams. Share in profits, not in debt.
Crowdfunding has proved useful. Ill fated Pledge Music showed the way initially and other sector agnostic crowd sites are filling a gap as well, Patreon, Go fund me etc. The basis of this is simply a love of the talent being expressed by fans who are prepared to invest some cash in return for a product or experience shared by the artist they love. The quantum can be small when an artist is at the start of their career with limited fan base, but it could be significant if they have done a SHOUT4 RevShare deal.
More recently the potential from emerging technologies in NFTs and DAOs has started to show an opportunity to raise cash. Problem is more at the other end for the investor who has put up the cash and is given some form of crypto currency. Can they easily convert this back into cash if an act is successful? Does the fiddly experience of purchasing NFTs lend itself to wider consumption? Are we creating more environmental challenges by supporting mass electrical consumption, an issue around this space?
The jury is definitely out at the moment and it may simply be at best an altruistic gesture. Critically as of this moment, you are not able to pay your rent or put food on the table with a piece of crypto in the UK, that has limited tradeability. Not sure that is a word but I think you get the point!
In summary, when thinking about money, we can focus on ensuring the amount needed upfront is limited so advances are recouped quicker and start working out realistically how the emerging technologies can realise truly tradable instruments to reward those that help reduce those upfront costs. Easy!
Perhaps not easy, but we are working on it. Until next time when we ponder: ‘Are We Live?’
Ric has a background in music as an artist, manager, label owner and promoter. He has combined this with a career away from music as CEO within SMEs and PLCs. As the architect of SHOUT4's Revshare model he is a strong advocate for artists retaining rights and providing legal and financial solutions to the DIY market which reflect the way the world is now and not the past.